Generic Drugs Substantially More Expensive In Canada
Than In the U.S.
By Adrian Howard

The Fraser Institute has updated their study of the 100 most
commonly prescribed brand-name drugs and the 100 most commonly
prescribed generic drugs in Canada. They concluded that
Canadian retail prices for generic prescription drugs in 2008 were
90 percent higher on average than retail prices in the United
States for identical drugs. This compares with an average of
112 percent in 2007 and 115 percent in 2006.

Of the 64 generic drugs in Canada that were directly comparable
to the U.S., 43 were more expensive in Canada, while 21 were more
expensive in the U.S. However, for the generic drugs that
were more expensive in Canada, prices were an average of 153
percent higher than in the United States.

Retail prices for generics in Canada were 73 percent the price
of the brand-name originator drug, compared with just 17 percent of
the brand-name equivalents in the U.S.

A variety of federal and provincial public policies are
identified as contributing to inflated prices for generic drugs in
Canada. Combined with exclusive distribution rights and fixed
reimbursement rates, there is a lack of competition between
generics driving down the price as there is in the United
States. The authors suggest that switching to policies that
introduce competitive market dynamics will act to regulate the
prices of generic drugs at comparable levels.

Cancer Society Calls For National Catastrophic Drug
Insurance Program
By Livia Aumand

The Canadian Cancer Society is calling for a federally-funded
national catastrophic drug insurance program, as reported by CTV
News on September 29, 2010. This is in response to concerns
that there are disparities between provinces, insurers, and between
individual Canadians, who may or may not have access to affordable
drug insurance. The Cancer Society also relied on a recent
survey, which suggested that, once informed of the average costs
for newer cancer drugs, 58 percent of Canadians felt that the costs
would have a "major" negative impact on their
finances. The survey also revealed that 74 percent of
Canadians would support a federally-funded national catastrophic
drug insurance program that paid for the full cost of prescription
drugs. Of the 74 percent, 31 percent were willing to pay
higher taxes and 28 percent would accept government service
reductions in areas other than health care, in order to fund such a
program.

The Manitoba Government has allocated $500,000 for possible
future trials of the "liberation" treatment for Multiple
Sclerosis ("MS"). The treatment, developed by
Italian doctor Paolo Zamboni, is intended to relieve a narrow-vein
condition known as Chronic Cerebrospinal Venous Insufficiency
(CCSVI) by unblocking veins with a balloon angioplasty
procedure.

The Saskatchewan Government has also pledged it would pay for
"liberation" clinical trials if scientific evidence shows
the process could significantly help patients. Other
provinces like Nova Scotia said it would follow suit. Quebec
is also considering funding national trials along with the
government of Newfoundland and Labrador.

This was an appeal of the decision of Madame Justice Gauthier
(in the Federal Court) who had found that although Lilly met its
burden to prove that Apotex infringed eight Lilly process patents
related to the manufacture of the antibiotic cefaclor for material
imported before June 3, 1998, Lilly failed to do so for the
cefaclor imported into Canada after June 3, 1998. Apotex
cross-appealed on the Judge's application of the
"Saccharin Doctrine".

The Federal Court of Appeal (the "FCA") dismissed the
appeal as it decided that the issue on appeal was essentially
factual: whether Apotex' manufacturer had changed from using a
patented to a non-patented process when it made the intermediate
compound needed to supply Apotex with the bulk cefaclor imported
after June 3, 1998. The FCA decided that the Judge had
sufficient basis for her conclusions and that no palpable and
overriding error was apparent from the Judge's findings as to
fact. The FCA found that the Judge was not wrong in law in
not excluding the testimony of a witness from Apotex'
manufacturer (Lupin) which Lilly objected to under rule 248 of the
Federal Rules because on discovery, an officer of Apotex had stated
that he had no knowledge of the process actually used by Lupin,
when in fact, unknown to Lilly, Lupin had written a letter in 2000
to Mr. Ivor Hughes as Apotex' lawyer advising him that it was
willing to cooperate in the litigation

The FCA noted that although the Judge exercised her discretion
when she accepted late tendered evidence of Apotex, the FCA should
not be taken to condone Apotex' unexplained failure to provide
timely responses to questions, to correct erroneous responses, and
to produce documents in a timely fashion and that it should never
be considered good practice for a party to fail to comply with the
rules of discovery.

The FCA also dismissed the cross-appeal and confirmed that the
"Saccharin doctrine" – i.e., the doctrine
whereby the importation of a product made abroad via an patented
process constitutes "use" and therefore infringement of
the Canadian process patent- which has been settled law in
Canada for over a hundred years and was endorsed by the Supreme
Court in Monsanto v. Schmeiser (2004), is still good
law. The FCA also rejected Apotex' alternative argument
that the Saccharin doctrine should not apply where the patented
process was for an "intermediate" product (as was the
case for the patents in suit) if a "material change" is
made to the product of the process prior to importation and instead
referred to the present law applied by the Trial Judge which
requires only that the patented process play an "important
part" in the manufacture of the imported
product.

Shire appealed the Order of Prothonotary Tabib denying it
permission to amend, in part, its Statement of Defence. For a
summary of that decision, see the September 2010 edition of this
newsletter. Mr. Justice Pinard in the Federal Court dismissed
Shire's appeal after hearing the matter de novo. He
held that the proposed defence was deficient and that no reasonable
cause of action or defence was raised by Shire.

Apotex appealed an Order of Prothonotary Aalto dismissing a
motion to strike parts of Pfizer's Statement of Defence
relating to res judicata, estoppel (issue and collateral),
comity and abuse of process. For a summary of the
Prothonotary's decision, see the July 2010 edition of this
newsletter. Apotex had been unsuccessful in challenging
Pfizer's patent in PMNOC proceedings and had commenced
an action to invalidate the patent. Part of Pfizer's
defence was that the earlier PMNOC proceedings should have
a limiting effect on Apotex's action and the evidence that
Apotex was entitled to put forward. Mr. Justice Hughes heard
the appeal de novo and dismissed the appeal. Pfizer
agreed to strike its defence in respect of the res
judicata grounds in light of certain jurisprudence but
submitted that the grounds of estoppel (issue and collateral),
comity and abuse of process should remain. The Judge agreed,
deciding that these issues had not been squarely raised previously
and should not be struck at the interlocutory stage.

Apotex brought a motion to set aside an Order from 2007 granting
Eli Lilly's applications for a prohibition Order in
PMNOC proceedings. The Order was confirmed by the
Federal Court of Appeal in 2008. Apotex brought the motion
because it was seeking a dismissal of Eli Lilly's applications
in order permit it to claim damages pursuant to section 8 of the
PMNOC Regulations. Section 8 requires an
innovator's application to be "withdrawn, discontinued or
dismissed" before a generic can claim damages. Madame
Justice Gauthier dismissed Apotex's motion. Referring to
case law she held that a prohibition order naturally expires at the
same time that the patent expires. This includes when a
patent is declared to be invalid in impeachment proceedings.
Expiry does not trigger section 8 damages as the patent is not
deemed to be withdrawn, discontinued or dismissed. So, if an
innovator prevails in prohibition proceedings, section 8 does not
provide redress to a generic even if the generic is later
successful and impeaches the patent in litigation.

Merck-Frosst ("Merck") applied for an order
prohibiting the Minister of Health from issuing a Notice of
Compliance to Teva for its generic version of Ezetimibe.
Teva's Notice of Allegation alleged that claim 21 of
Merck's patent (the '149 patent) was obvious in light of an
earlier prior art patent filed by Merck (the '007
patent).

Mr. Justice Phelan held that the obviousness allegation was
unjustified. He did not accept the evidence of Teva's
expert: that a person of ordinary skill in the art would look at
the '007 patent and immediately, without any ingenuity,
undertake a multistep development process and arrive at the
disclosure of the '149 patent. The Judge found Teva's
multistep process to require a significant degree of ingenuity and
inventiveness. He also considered it likely that the
multistep process was created as a result of a hindsight analysis
and that it did not reflect the realities of commercial drug
development. The Judge was particularly influenced by the
amount of time, money and effort Merck spent in developing the
Ezetimibe compound (which was covered by claim 21 of the '149
patent) and contrasted this to the relatively simple and
straightforward hypothetical process proposed by Teva.

Epicept Corporation v. Canada
(Health) (2010 FC 956)
T-2009-09Judicial review of Minister's decision that CEPLENE is
not an "innovative drug" for the purposes of data
protection, CEPLENE, September 24, 2010

The Minister of Health refused to grant data exclusivity to data
from Epicept's phase I and phase II clinical trials because
CEPLENE is not an "innovative drug". CEPLENE
includes the active ingredient histamine dihydrochloride for use in
remission therapy in acute myeloid leukemia. CEPLENE was approved
as a new drug and received a Notice of Compliance. The
Minister refused to grant data protection because the active
ingredient had been previously approved in another drug in
Canada. This decision was important for Epicept as its
relevant patent expires in 2010.

Epicept challenged the decision by way of judicial review.
The Court upheld the Minister's interpretation of an
"innovative drug" under the data protection provisions
and refused to grant data exclusivity to Epicept. The Court
held that an "innovative drug" is a new drug whose active
ingredient has not been previously approved.

Novopharm appealed the decision of the Federal Court to grant an
order of prohibition to Pfizer in respect of Novopharm's
generic version of VIAGRA. The Federal Court of Appeal (the
"FCA") dismissed the appeal. Claim 7 of
Pfizer's patent covered sildenafil, the active ingredient in
VIAGRA. Two grounds of appeal were raised by Novopharm:
insufficiency and inutility. The FCA held that the trial
judge was correct to limit the "invention" at issue in
this case to that disclosed in claim 7 rather than the patent as a
whole. This was because claim 7 constituted its own
invention. In respect of the insufficiency allegations, as
claim 7 clearly stated the formula for sildenafil the FCA held it
to be sufficient. The FCA also confirmed that the "best
mode" requirements of section 27(3)(c) of the Patents
Act only applies to patents covering machines. In
respect of the inutility allegations, the FCA reaffirmed that proof
of utility does not need to be included in the patent and that
evidence beyond the patent can and will be necessary.

An impeachment action was brought by Novopharm in respect of a
patent for STRATTERA alleging obviousness, anticipation, utility
and improper selection. Novopharm failed on obviousness,
anticipation and improper selection, but the Court found in their
favour on utility.

The patent claimed the new use (i.e. second medical use) of
atomoxetine for treating ADHD. In respect of the obviousness
attack, Mr. Justice Barnes found that it was not self-evident that
it would work and Novopharm's witnesses applied
hindsight. Furthermore, any testing that would be required to
demonstrate the efficacy of the drug would be more than
routine. Even a high level of motivation to take a particular
step cannot transform a possible solution into an obvious
one.

In respect of anticipation, the Court rejected two instances of
alleged anticipatory disclosure. First, a conversation that took
place between an inventor and one of the Novopharm witnesses 18
years ago was rejected due to inconsistencies between the
witness' testimony in court and a report the witness wrote soon
after the meeting. Second, a discussion between the inventor
and a hospital representative regarding engaging the hospital in
research with atomoxetine was also rejected as it did not put the
inventive idea into the public domain - these types of discussions
are presumed to be in confidence.

In respect of the utility attack, the Court found that the
promise of the patent is that atomoxetine is clinically useful for
treating ADHD. The Court held that a pilot study conducted on
behalf of Eli Lilly at the time had a number of methodological
limitations and did not demonstrate utility. When assessing
utility according to the sound prediction route, the Court held
that the failure to include or disclose the findings of the study
in the patent meant that the test for sound prediction was not
satisfied.

Upcoming Events

November 4-5, 2010, Toronto, The Canadian Institute
9th Annual Forum on Pharma Patents

Celgene Corporation v. Attorney General of Canada
(33579)
Health law – Drugs – Patent Act, s. 80(1)(b)
– Patented Medicine Prices Review Board's decision
holding that Board had jurisdiction to require Celgene Corporation
to provide information about the pricing of the drug Thalomid
– Board decision set aside on appeal – Federal
Court of Appeal upheld Board's decision – Whether the
majority decision of the Federal Court of Appeal conflicts with
jurisprudence of this Court, the Federal Court of Appeal and
Exchequer Court – Whether the Federal Court of Appeal
ignored the international comity-based presumption against the
extraterritorial application of domestic law – Whether
the decision of the Federal Court of Appeal wrongly extends the
jurisdiction of an important Canadian regulator to sales made in
the US, contrary to its enabling legislation – Whether
the Federal Court of Appeal erred by ignoring Parliament's
wording of the Patent Act, and inserting its own and whether the
majority changed "in any market in Canada" to "into
any market in Canada" – Whether the appeal court
erred in obiter and extended the Board's jurisdiction by also
ruling on jurisdiction over price regulation when this case
involved jurisdiction over disclosure of data – Whether
this case has wide implications for other foreign suppliers of
medicines.

Data protection presents one of the biggest challenges for both trustees and employers in 2018. As data controllers get ready for the GDPR, they are faced with problems in ensuring that existing processes and policies comply with the new law.

This Q&A session, led by pensions and information lawyers, will focus on practical solutions for how trustees and employers should deal with member communications, third party service providers and reporting data breaches, as well as any other areas that affect you.

Data protection presents one of the biggest challenges for both trustees and employers in 2018. As data controllers get ready for the GDPR, they are faced with problems in ensuring that existing processes and policies comply with the new law.

This Q&A session, led by pensions and information lawyers, will focus on practical solutions for how trustees and employers should deal with member communications, third party service providers and reporting data breaches, as well as any other areas that affect you.

2018 is set to be another big year in employment, with employers set to face new challenges and responsibilities. At our event, looking ahead to next year, we will be discussing four key issues you might face in 2018, providing useful tips and answering your questions.

Earlier this year, we reported in a BD&P Start-Up and Early-Stage Companies Newsletter that Bill C-45, was introduced in the House of Commons, providing long-anticipated insight into the direction that the legal framework for recreational marijuana in Canada is headed.

A team of Torys lawyers have written "Canada/US Cross-Border Cannabis Issues" for Lift News. Cheryl Reicin, Shane Thomas, William Gray Jr and Kevin Tuhoy, authored the article which provides an introductory overview comparing the U.S. and Canadian cannabis landscape and the resulting cross-border issues.

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